ABC Company had the following results of operations for the past quarter: Sales (10,000 units at $25) $250,000 Direct materials and labor $150,000|| Overhead (40% variable) $50,000 Selling expenses (all fixed) $30,000 Operating income $20,000 A government agency offers to buy 2,000 units at $18 per unit. In addition to variable manufacturing costs, accepting this order would increase fixed overhead by $3,000 and selling expenses by $1,500. If ABC accepts the offer, its profits will: A. Increase by $15,000 B. Decrease by $2,500 C. Increase by $7,000 D. Decrease by $5,500

ABC Company had the following results of operations for the past quarter: Sales (10,000 units at $25) $250,000 Direct materials and labor $150,000|| Overhead (40% variable) $50,000 Selling expenses (all fixed) $30,000 Operating income $20,000 A government agency offers to buy 2,000 units at $18 per unit. In addition to variable manufacturing costs, accepting this order would increase fixed overhead by $3,000 and selling expenses by $1,500. If ABC accepts the offer, its profits will: A. Increase by $15,000 B. Decrease by $2,500 C. Increase by $7,000 D. Decrease by $5,500

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter5: Activity-based Costing And Management

Section: Chapter Questions

Problem 16MCQ: Suppose that a company is spending 60,000 per year for inspecting, 30,000 for purchasing, and 40,000...

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